Chief Financial Officer (CFO): Definition, Duties, and Roles

The Chief Financial Officer (CFO) is a senior executive overseeing the company’s finances. As a c-suite member or the highest-ranking decision maker, the Chief Financial Officer is expected to take on various responsibilities that focus on the company’s financial health and growth, including planning and financial analysis, monitoring expenses, and income.

In addition, other duties of the CFO are reviewing financial performance reports, managing and tracking liquid assets, assessing investments, and analyzing the company’s overall financial condition.

Becoming a CFO is not only because you are heard; many tasks must be carried out. However, does Sinaumed know what a Chief Financial Officer (CFO) is? Approximately how much is the salary of a CFO? Let’s look at the explanations that have been summarized below.

Definition of Chief Financial Officer (CFO)

The Chief Financial Officer (CFO) is the highest-ranking in the financial industry. Meanwhile, in other sectors, the CFO is often seen as the person with the second highest rank after the CEO in the company.

The Chief Financial Officer will be in charge of directing the goals, objectives, and the company’s financial budget. If you work as CFO in a company, you will oversee the investment of funds held by the company and assess and manage the associated risks.

You will also be tasked with overseeing cash management activities, implementing a capital-raising strategy to support company expansion, and handling mergers and acquisitions. Most Chief Financial Officers are also responsible for managing the company’s investments and will later sit on the board of directors.

If you work as the Chief Financial Officer in a smaller company, you will likely be expected to perform various accounting tasks. Meanwhile, executives in large companies will generally be tasked with reviewing reports and data from multiple divisions.

Responsibilities of the Chief Financial Officer

A professional Chief Financial Officer has a strategic mindset. Based on solid analysis, they can project a picture of a company’s long-term finances and make those finances more developed.

Identifying which areas of the company are more efficient and leveraging certain regions is critical to the growth and success of the company. The CFO can locate and execute well-thought-out financial plans and tax strategies.

Because it is essential for a company’s success, they are members of the management team responsible for overseeing and improving the company’s operations and financial activities.

The Chief Financial Officer will spend their time assessing long-term risks and financial opportunities, increasing the company’s earnings, improving profitability, implementing new revenue strategies, and overseeing the course of cash flow. This includes both daily analysis and long-term analysis. The following are some of the responsibilities of a Chief Financial Officer, including:

  1. Work with project managers on new ways to increase profitability
  2. Support marketing and sales teams
  3. Help raise capital
  4. Manage the course of internal cash flow
  5. Oversee and support short-term and long-term strategic planning
  6. Coordinate with financial advisers
  7. Involved with multiple assignments and economic projects

A good Chief Financial Officer is a cross-functional leader who carefully considers how decisions will affect other departments or divisions in the company.

The Chief Financial Officer is very familiar with all company members. They can identify problems and situations early on and may see things that others miss. Therefore, CEOs usually rely on the CFO as a company’s early warning system regarding any problems that must be addressed.

Duties of a Chief Financial Officer

If explained in detail, the CFO has a lot of duties and authority. However, the points below outline the responsibilities and charges that a CFO usually performs.

1. Supervise the Company’s Finances

The Chief Financial Officer will be responsible for reporting financially in a detailed, detailed, and accurate manner to stakeholders. Therefore, they are obliged to supervise the implementation and financial management of the company so that it runs according to the results of the agreement and plans.

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2. Perform treasury duties

The CFO is a leader engaged in treasury duties, namely determining the company’s financial policies by the conditions of the company. Debt plan investment objectives and analyzing financial risks will be the responsibility of a Chief Financial Officer.

3. Creating a Company Economic Strategy

As the two points explained above, the CFO must understand various situations related to the company’s finances. Therefore, they must be able to identify and submit an effectiveness report on the company’s strategy. Usually, the CFO’s duties do not deviate from those described above.

Even though it looks very complex, you can conclude that this CFO is responsible for ensuring the company can run well. This must be supported based on the policies and also the analysis carried out by the CFOs as their job.

The role of the Chief Financial Officer

According to the Deloitte report, traditionally, this CFO has had two service roles, namely preserving organizational assets by minimizing risk and successfully managing bookkeeping, and the operator’s role, carrying out stringent related financial operations that are effective and efficient.

This role was initially conceived as a more back-end and fiduciary function, with the Chief Financial Officer being tasked almost exclusively with quality control, compliance, producing, and analyzing company finances.

However, this Deloitte research shows that the role of the CFO is growing. With the digital economy, rapidly changing technology, and increasing economic uncertainty and investor scrutiny, the role of the Chief Financial Officer is becoming more forward-looking and exciting with a focus on value and business opportunity.

For this reason, in addition to being a servant as well as an operator, the Chief Financial Officer must also be a strategist, assisting in shaping the strategy, as well as the direction of the company as a whole, and acting as a catalyst to foster a company-wide approach and financial mindset to help business segments. Others get better.

Today, the Chief Financial Officer is a trusted advisor to the CEO and a business partner. Often, they serve as the critical intermediary between the back office, C-Suite, and the frontline business units of a company. The CFO plays quite an essential role in helping shape the company’s long-term goals.

In addition, the CFO also acts as a diplomat with third parties. Because they will be required to continue to ensure the company’s financial sustainability. Therefore, the Chief Financial Officer is the face of a company’s sustainability for customers, vendors, bankers, and other stakeholders.

For more details, the following are several points of explanation regarding the role of the CFO in the company, including:

1. Administrators

As an administrator, the CFO must be able to know, maintain, and record all assets owned by the company. Maintaining assets here means they have to ensure that all purchases can provide results for the company. Therefore, the right decision is essential if investments are less profitable for the company.

2. Catalyst

Catalyst here means a driving force so that something can happen. In this case, a CFO acts as a catalyst, which means they must be able to stimulate various developments so that the business can run for some time. This goal can be accomplished by providing different kinds of finance-related policies. That way, the company’s expenses can have a practical value, but the results are still maximum.

3. Operators

The role of the Chief Financial Officer as an operator is to carry out various operational tasks carried out daily in the financial sector. Such studies, for example, carry out financial records, tax-related matters, forecasting, etc.

4. Strategy Giver

In providing a strategy, a CFO must offer the right design for finance, an essential component of the company. This kind of formulation can indeed be done with other company leaders, but a CFO must be able to analyze it for his own company.

Qualification of Chief Financial Officer

In this fast-paced business environment, the Chief Financial Officer is less a corporate accountant and a more multifunctional executive with financial skills. Automating this accounting function has reduced some of the accountant’s duties in the Chief Financial Officer role. However, the position still requires considerable financial management experience and academic training in accounting and finance.

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This Chief Financial Officer qualification is often an MBA or master’s degree in business administration in accounting, finance, and related fields, such as CPA or certified public accountant or CMA (certified management accountant). Some CFOs are certified management or certified public accountants.

These CFO candidates are often expected to have at least ten years of accounting or finance experience. Five of those years must be held in a managerial role. The Chief Financial Officer must have a solid understanding of GAAP and other tax accounting principles and preferably have experience working with or reporting to the SEC.

Along with analytical skills, a Chief Financial Officer must have good communication skills to effectively communicate the company’s financial health and strategic goals to the CEO, C-Suite, board members, vendors, and stakeholders.

In addition, a CFO must also have a vision and foresight that is aligned with the market and trends. This will enable them to create and implement a business plan for the company that aligns with its bigger picture and long-term goals.

A deep understanding of the business is a must for today’s CFO. Those who become Chief Financial Officers must also be willing to try new things and take calculated risks to grow the business and improve the company’s overall financial position.

How to Become a Chief Financial Officer (CFO)

Generally, this CFO position requires the candidate to have more than five years of experience and at least a bachelor’s degree in Accounting or Management. However, it is common for companies to require candidates for this position to have master’s degrees.

With extensive duties and responsibilities, are you still interested in becoming a Chief Financial Officer? If so, here are some ways you can become a CFO, including:

1. Develop Analytical Skills

Becoming a Chief Financial Officer usually involves more analysis than direct fieldwork. Therefore, good analytical skills are needed to work with large amounts of data. You can study economics, law, accounting, and risk management, which will later become a provision of knowledge as a Chief Financial Officer.

2. Have a Desire to Learn

Even though this CFO assignment focuses more on company finances, learning many things also includes provisions you can bring to become a professional CFO. Learn about technical work, the focus of the company’s field, the nature of the company’s investors or clients, and more.

It looks pretty straightforward, but it is often forgotten. Therefore, don’t just focus on learning the big but also the small things that will help you pass the selection to become Chief Financial Officer.

3. Understand and Follow the Latest Trends

Study and follow the latest trends to see if the business concept that your company applies is still relevant today, even for the next ten years. The times are growing, and business trends will also be more varied. Many unexpected things happen in the development of the industrial world. Therefore, you must have a visionary and calm mind to generate profits for the company.

4. Details Oriented

Becoming a Chief Financial Officer can have a significant domino effect if you don’t go into details. Just imagine if you write the wrong digits into all documents. The powerful impact that will be caused will undoubtedly make one company rowdy and have a harmful effect in the long run.

Surely that doesn’t want to happen. So do not be surprised if the nature of detail and caution is one of the characteristics required by a CFO.

Chief Financial Officer (CFO) Salary

From the explanation above, we can conclude that the Chief Financial Officer is a company leader with a role and responsibility in the financial sector. This consists of planning, matters related to administration, and records at the company where they work.

However, the CFO also has the main task of carrying out financial planning and is responsible for the company’s cash flow. In addition, the CFO must also be able to analyze the financial level that exists within the company to create further policies.

With heavy duties and responsibilities, of course, the salary of a CFO is no joke. Based on research that has been done, a CFO can get a salary of $288,696 (USD)/year.